Serbia: Implementation of the Law on Payment Services begins
Banking & Finance
Publisher: Bojović & Partners
(Official Gazette of the Republic of Serbia, no. 139/2014)
Even if the Law on Payment Services (hereinafter the “Law”) has come into force at the end of 2014, the beginning of its implementation was postponed for 1 October 2015, while certain provisions shall be applicable upon the accession of the Republic of Serbia to the European Union. The Law has replaced the Law on Payment Transactions, with the exception of the provisions of the law governing the operation of enforced collection procedure.
The main reasons for the adoption of the Law certainly lay in the accelerated technological development, emergence of new payment services and instruments, the general tendency of improving the provision of such services at a global level, and all with the goal of modernizing the markets and the payment systems of the Republic of Serbia. The Law primarily regulates three important areas: the provision of payment services, electronic money, and payment systems.
Electronic money institutions are introduced for the first time, which should bring an end to problems regarding payments through online payment services and over the internet. Also, the implementation of the Law on payment transactions between non-residents and residents in the currency of a third country, as well as amendments to the Law on Foreign Exchange Transactions, now allow residents to perform payment transactions for the online buying and selling of goods and services in foreign countries through local electronic money institutions.
The issuance of electronic money on the territory of the Republic Serbia will be performed by banks, electronic money institutions (legal entities), public postal operators, the National Bank of Serbia and the Treasury Department, i.e. other public authorities in line with their legal competences. The electronic money institutions are obliged to replace, without delay, the funds received from the holder of electronic money into electronic money and received funds may not be treated as a deposit, which is in line with the rule against offering interest on electronic money.
The Law provides companies with the possibility of operating as hybrid payment institutions, meaning that companies which provide payment services may also engage in other economic activities. Also, the law allows payment institutions to approve short-term loans (loan repayment period must be under 12 months) in relation with the provision of payment services that include execution of payment transactions in which the funds have been secured by the loan that is approved to the payment services user, issuance and acceptance of payment instruments and the execution of payment transactions whereby the payer's consent is given through the use of telecommunication, digital or information technology devices.
The National Bank of Serbia is responsible for the issuance of licenses to payment institutions, as well as for the approval of a particular institution for the issuance of electronic money.
We also note that in the meantime a number of decisions has been adopted which regulate in more detail the performance of the business of electronic money institutions, supervision over the business and implementation of the Law by payment institutions and electronic money institutions, the manner of keeping the register Page | 3 of the mentioned institutions and issuance of the licenses by the National Bank of Serbia, etc.
The enactment of the Law allows full functionality of various Internet payment services such as e.g. PayPal and Google Checkout.
The novelties adopted by the Law should certainly represent a significant relief to businesses in Serbia, especially those trying to place their products abroad.